Editor's note: This story has been updated to clarify the city of Wausau's financial contribution to the Riverlife Village development and to credit the first news outlet to report on this matter.

WAUSAU - The head of the company behind a housing and commercial development along Wausau's riverfront was charged in a fraudulent investment scheme in Colorado over a decade ago, court records show.

But he says he also was a victim who lost money in the scheme, and the charges eventually were dropped.

Jason Sharkey is the CEO of Quantum Ventures, a real estate development company spearheading Wausau's Riverlife Village development. The project is expected to bring high-end apartments, townhomes and a mixed-use commercial space to the eastern bank of the Wisconsin River.

City officials approved a change in developers from Barker Financial to Quantum in January.

Sharkey was part of a company in the early 2000s that conned several Colorado residents into investing hundreds of thousands of dollars in a real estate fund, according to a federal lawsuit filed in 2007. The Wausau Pilot & Review first revealed the details of the lawsuit in a report published Monday.

USA TODAY NETWORK-Wisconsin has independently verified the background of the case.

Investors sued Alberta-based Klytie's Developments, which was largely controlled by Hidai and Efrat Friedman, and Sharkey as an employee. Klytie's also established a limited liability company in Colorado.

According to court documents, Klytie's claimed it held investor funds in a trust that did not exist. The company also said it owned non-existent real estate property in Vancouver, Toronto and Arizona, overstated the value of a residential rental property in Calgary, and claimed to own a shopping mall that in fact belonged to a Vancouver development company.

An investigation by the Alberta Securities Commission found that the Friedmans used investor money for personal expenses.

In an interview with USA TODAY NETWORK-Wisconsin, Sharkey said Klytie's hired him in 2005 to serve as regional vice president. According to a written statement, he earned a salary of $52,000 plus commission. Part of his position entailed raising capital for the global real estate fund and overseeing a team of people who did the same, he said.

Indeed, federal court documents indicate that Sharkey repeatedly recruited investors, telling people the fund guaranteed an annual return of 10 percent and regularly returned at 30 to 40 percent. In one instance, Sharkey met with investors in the Cayman Islands to show them an area that would be developed.

On top of the federal suit, Sharkey was involved in a case with the state of Colorado, facing charges of securities fraud, making untrue statements and theft of $15,000 or more, according to court documents.

Pam Russell, a spokeswoman for the Jefferson County, Colorado, district attorney's office, said Sharkey was given a deferred sentence — allowing him to clear his record if he follows court-ordered rules. About a year into that process, she said, the court authorized his supervision to be transferred to Wisconsin and ordered him to pay a restitution of $400 a month plus 50 percent of his gross commission.

Court documents indicate that the charges against Sharkey were eventually dismissed, and Sharkey told USA TODAY NETWORK-Wisconsin he continues to make restitution payments.

Sharkey said he was just as duped by the Friedmans as everyone else. He said the Friedmans told him they had been in business longer than they were. They even showed him the company's purported properties and had keys to the buildings, he said.

Because "everything looked really good," he said, Sharkey and his wife ended up investing $134,000 themselves. Other family members of the Sharkeys invested an additional $122,000, he said.

"I would’ve never risked their money if I thought it was a fraud as it turned out to be," he said.

Sharkey said the Friedmans covered their bases well and always had a logical answer when questions of legitimacy were raised. He said in an email that he wasn't aware of any issues until Hidai Friedman mistakenly sent him a settlement agreement with the Alberta Securities Exchange in late 2006.

Sharkey resigned from the company in 2007 before he was charged. He was young and somewhat naive at the time, he said, but the incident has made him more diligent in business dealings today.

"I certainly learned that you can’t take people at face value any longer," he said.

Wausau officials didn't know about the Colorado case previously, said Planning, Community and Economic Development Director Christian Schock, but the development agreement process wouldn't have turned up such information. The city doesn't conduct background checks, he said.

"Previous business dealings or other issues with a particular investor is not relevant to this project per se," Schock said.

Schock said the city is protected in the agreement and won't kick in money until the project is developed and moving forward. The city expects to spend $2.7 million on the $20 million initiative. The city spent $370,000 on plans for Riverlife, but that money did not go to the developer.

Quantum has met its requirements so far, Schock said, and the city can select a new developer if the company ever falls out of compliance.

Wausau's Economic Development Committee is scheduled to discuss an update on the Riverlife project during its meeting at 5:15 p.m. Tuesday at City Hall.